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Wednesday, August 30    |    Upstate South Carolina News, Sports and Information

Oil supplies are vulnerable
Prudhoe Bay disruption shows need to expand domestic production to hedge against restricted supplies, higher prices.

Published: Wednesday, August 9, 2006 - 6:00 am


If Congress needs motivation to pass legislation to lift the ban on oil drilling off the Atlantic and Gulf coasts and in the Arctic National Wildlife Refuge, it should look no further than news Monday that BP was shutting down production in an Alaskan oilfield that supplies about 8 percent of domestically produced crude oil.

The response on the commodities market was a 3 percent rise in crude oil prices to just less than $77 a barrel. The news also prompted experts to predict gasoline prices could rise by as much as 10 cents a gallon because of the indefinite shutdown. BP said the shutdown, required because of corrosion within a pipeline that takes oil from the nation's largest oilfield to the main Alaskan pipeline, would reduce the U.S. oil supply by about 400,000 barrels a day.

By contrast, the Energy Information Administration estimates ANWR would produce 1 million barrels per day at its peak. Estimates vary on how much oil could be taken from Atlantic and Gulf coastal waters. A main argument against drilling in ANWR and, now, lifting the coastal drilling ban, has been that there's not enough oil in those areas to significantly impact prices. This week's news suggests otherwise and makes a convincing case for expanding domestic oil production to hedge against major disruptions.

There's no disputing this nation needs to develop alternative fuels. They are the only way to ultimately wean the United States from its dependence on oil in general and foreign oil in particular. But those solutions are long-term, and until they are developed and widely accepted, the United States is too susceptible to the uncertainties of the oil market.

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The shorter-term solution is to unlock the important stores of petroleum off the U.S. coasts and beneath the Alaskan wilderness. The Prudhoe Bay disruption, coupled with uncertainties over global supplies, shows just how vulnerable oil and gas prices are to supply disruptions of a magnitude that could easily be offset by production in ANWR and off the Atlantic and Gulf coasts.

Congress has the opportunity to stabilize the situation. The House and Senate recently passed two vastly different bills that would expand drilling opportunities. The House version would allow drilling at least 50 miles off the coasts of the Atlantic Ocean and the Gulf of Mexico (states would have the option to expand the limit to 100 miles). That, along with opening ANWR, is sensible.

As Congress reconciles those two bills, it should mark the portentous Prudhoe Bay shutdown: This nation is susceptible to supply disruptions, and the oil off our coasts and beneath ANWR can be an effective shield against them.


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